In a recent turn of events, YG Entertainment, the South Korean entertainment powerhouse, is grappling with an uncertain future as BLACKPINK's group activities remain in limbo.

Daeshin Securities, a prominent securities firm, made a significant adjustment to YG Entertainment's target price on January 22, lowering it from 90,000 to 65,000 won. This move is fueled by the anticipation of an inevitable decline in YG earnings throughout 2024.

Despite the downward adjustment, Daeshin Securities maintained a "Buy" investment recommendation, citing valid expectations for the emergence of new talent.

Uncertain Future for YG Entertainment Amidst BLACKPINK's Inactivity

As of the fourth quarter of the previous year, YG Entertainment reported a notable 28.8% decrease in revenue compared to the same period the year before, amounting to 890 billion won.

Furthermore, the operating profit witnessed a substantial decline of 60.9%, reaching 61 billion won.

These figures represent a significant deviation from consensus estimates, with the operating profit expected to fall 32.5% below projections.

Attributing Factors: BLACKPINK's Inactivity and Contract Renewal Costs

The decline in YG Entertainment's performance is attributed to a combination of factors.

Firstly, the inactivity of artists, especially the prolonged hiatus of BLACKPINK, has contributed to the subdued financial figures.

Secondly, the costs associated with BLACKPINK's contract renewal are proving to be a substantial burden.

The collective re-contracting costs for the group are recognized as fixed costs over the contract period on a quarterly basis, adding to the financial strain.

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2024: A Pivotal Year with Unprecedented Challenges

Industry experts are pointing towards 2024 as a pivotal year for YG Entertainment, marked by unprecedented challenges.

While BLACKPINK has officially renewed their contracts regarding group activities, the uncertainty persists regarding whether these activities will indeed transpire within the year.

The ambiguity surrounding the group's plans casts a shadow over YG's overall performance in 2024. From a conservative standpoint, an inevitable decline in earnings is anticipated.

New Talent Emerges: BABYMONSTER's Role in YG's Future

Despite the gloomy outlook, there is a glimmer of hope for YG Entertainment. The company's new girl group, BABYMONSTER, has already formed a considerable fandom, leveraging the fanbase effect created by BLACKPINK.

The success of YG Entertainment's future performances hinges on BABYMONSTER's growth trajectory.

Notably, the emphasis has shifted towards the popularity of music streams rather than traditional album sales figures, making music streaming performance a crucial investment point for the company's revival.

YG Entertainment faces a challenging landscape in 2024, marked by financial contractions, uncertainties surrounding BLACKPINK's activities, and the financial burdens associated with contract renewals.

However, the emergence of BABYMONSTER and a strategic focus on music streaming could potentially pave the way for YG Entertainment's resurgence in the highly competitive entertainment industry.

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KpopStarz owns this article.

Written by Cassidy Jones.